- Actions taken to better serve the marketplace and owners, grow sales and generate profits to reinvest in products and sustain operations for the long term
- Business continuously looking at ways to accelerate its scale and operational flexibility to deliver steady stream of new, highly featured products to better compete with global manufacturers
Louisville, Ky.—August 26, 2016—GE Appliances (GEA), a Haier company, today informed employees and officials from the IUE-CWA Local 83761 of two actions it is taking at Appliance Park, its largest manufacturing operation, to better serve customers and improve the business’ ability to compete and grow in the crowded and increasingly competitive U.S. appliances market.
Taking Action to Improve Customer Service, Reduce Costs
Following talks between GEA and officials from the IUE-CWA Local 83761, the decision has been made to proceed with the transfer of work from GE Appliances’ AP10 warehouse operation to a third party in early 2017 to improve customer service and reduce costs.
The company first announced the proposal on April 20, 2016, due to the AP10 warehouse being uncompetitive with the other seven GE Appliances Distribution Centers (ADCs) across the country, all managed by a third-party provider with warehousing as its core competency.
Although GE Appliances has invested more than $5 million in AP10 since 2013 to improve customer service, productivity and cost, the warehouse operation has continuously lagged behind industry performance. It costs 30% more to move product in AP10 than it does at other ADCs. Key performance metrics have not improved. Discussions with the union over the last year have not been able to achieve needed improvements in productivity, cost, quality or damage in the AP10 warehouse.
Redirecting Resources to Growth Markets, Products
In a separate decision, the company has announced it plans to exit the heat pump water heater (HPWH) segment due to continued weak consumer demand and an inability to achieve the profitability needed to make the HPWH a viable product for GE Appliances (GEA). With this exit, the company will cease manufacturing its GeoSpring™ HPWH products in Building 2 at Appliance Park at the end of 2016 and focus its resources on other products with greater consumer demand and growth potential.
Although the GeoSpring HPWH product is the most efficient electric water heater available, demand for such products has failed to materialize at expected levels. In 2016, the total HPWH segment is only expected to reach about 60K units—less than 1.5% penetration of the available electric water heater category.
Consumers’ incentive for paying higher upfront product acquisition costs for the high-technology, energy-efficient heat pump water heaters has declined as energy costs have dropped. This is in spite of the fact that the significant energy cost savings over the life of the HPWH compared to a conventional electric water heater more than pay for the product within a few years of purchase.
The company made the decision to exit the segment after a recent operations review, sessions that are held regularly to determine which products and operations are doing well and where changes are needed to improve GEA’s ability to compete for the long term in the intensely competitive, very crowded U.S. appliances industry. Without a healthy segment with growing consumer demand for the GeoSpring HPWH, the company decided to exit the segment to minimize losses, drive out cost and focus on delivering the products customers want.
Each of the company’s product lines, factories and supporting operations must continuously improve and on their own be competitive with like operations both inside and outside of GEA. This is especially important as the business continues to transition to a stand-alone company solely responsible for generating the funding to run the business and continue to invest in growth.
The 200 hourly employees currently working in the AP10 warehouse and the 100 employees currently working in Building 2 making the GeoSpring HPWH are expected to be absorbed into Appliance Park to fill vacant jobs created by attrition between now and early 2017. There is limited impact anticipated to the 21 salaried employees working in those operations. In the event a salaried employee is impacted, the company will provide assistance to assess alternate job placement opportunities, based on their skills and interests.
GE Appliances employs 12,000 people in the U.S., about 6,000 in Louisville, Kentucky, and continues to invest and make products where the business can be profitable and competitive. Since 2009, GE Appliances has invested more than $2 billion in its U.S. production operations and products and added 3,000 U.S. jobs.
GE Appliances, a Haier company, manufactures and sells refrigerators, freezers, cooking products, dishwashers, washers, dryers, air conditioners, water filtration systems and water heaters. For more information on GE Appliances, visit www.geappliances.com.